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25 December, 08:58

The accounts receivable balance for Renue Spa at December 31, 2017, was $61,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $3,750. During 2018, $2,100 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $500 of receivables that had been written off in a previous accounting period. Services provided on account during 2018 were $215,000, and cash collections from receivables were $218,000. Uncollectible accounts expense was estimated to be 2 percent of the sales on account for the period. Required Organize the information in accounts under an accounting equation. Based on the preceding information, compute (after year-end adjustment) : (1) Balance of Allowance for Doubtful Accounts at December 31, 2018. (2) Balance of Accounts Receivable at December 31, 2018. (3) Net realizable value of Accounts Receivable at December 31, 2018. What amount of uncollectible accounts expense will Renue Spa for 2018?

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  1. 25 December, 12:01
    0
    AR 58,000

    allowance 6,900

    net account receivable 51,100

    bad debt expense for 2018: 4,300

    Explanation:

    AR 61,000

    Allowance 2,100

    collection of a write-off account

    cash 500

    allowance for doubful account 500

    215,000 credit sales - 218,000 collection

    ↓3,000 decrease in account receivable

    uncollectible 2% of sales = 215,000 x 2% = $4,300

    bad debt expense 4,300

    allowance for doubful accounts 4,300

    AR 61,000 - 3,000 = 58,000

    Allowance 2,100 + 500 + 4,300 = 6,900

    Net AR 51,100

    Bad Debt expense 4,300
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